For many, binary options trading has become a career, while for others this investment tool is used as a means of generating additional income. The way these trades work is quite simple, as each investment is based upon a forecast of asset price movement. The only question that must be answered is, up or down? Those who are able to answer this question correctly more often than not stand to earn a substantial amount of profit each day. |
Although the ability to correctly forecast the upcoming direction of price movement is at the heart of each trade, there are other decisions that must be made. One will be to select an expiry time. Every binary options trade runs in conjunction with a specific time-frame, meaning that all trades have both a start time and ending time. Only when this time period has elapsed will the outcome of the trade be known. If the price is higher or lower as predicted than the price of the asset when the trade began, money is earned.
Another important selection that needs to be made is that of an investment amount. This is the amount that will be risked when the contract is purchased. No doubt, financial risk can be frightening, but within most platforms the minimum investment amount is quite low. The ability to control the investment amount brings with it the ability to control risk. Since no loss amount can ever exceed the investment amount, fluctuating losses are simply not possible on standard trades, nor are fluctuating return rates.
A large part of the appeal of binary options is the profit payouts that are offered. Within some platforms these can be as high as 85%, and sometimes even more. There are a few brokers that do offer small refunds on losing trades, but most platforms have abandoned this in exchange for higher upfront payments on winning trades. The prospective profit amount is fixed, being established and made known in advance of every contract purchase. With varied risk levels come varied profit offerings, but in no case will the offered rate change once the trade is live.
In order to trade binary options, a broker will need to be selected. This is an important decision, as platforms can vary quite a bit in what they offer. The most important components include easy navigation and trade selection, plenty of prospective opportunities, access to customer service, and a wide variety of trade types, assets, and expiration times. Banking functionality should also be taken into consideration. Deposits and withdrawals should be hassle-free and the banking area of the website should be secure.
The aforementioned basic trade (up or down) is not the only option for profiting from the ability to forecast price direction. There are other trade types to consider such as Pairs, in which the goal will be to determine which of two assets is going to perform better than the other. One Touch is another type. With this trade the objective is to determine in advance whether the price of a selected asset is going to move enough to touch a target price while the contract is open.
Additional trade types provide more profit potential when they are paired with the prevailing market conditions, as do expiry times. Binary options have become known as the speediest of profit methods known to man. Within some platforms, trades can remain open for only 30-seconds. Such expiration times allow for fast profits and an extremely high daily trade volume. Much longer expiry times are available as well for those who prefer them.
As with every investment method on the plenty, binary options trading does come with some risk. The good news is that this investment tool provides several means of risk control. With the start-up costs and minimum investment amounts being low, inexperienced traders can enter the market without the need to commit a large amount of funds. With many of the top brokers such as Mayfair Options now offering training and educational materials, learning how to trade has never been easier.
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